The 3 per cent figure is broadly in line with economists' expectations of 3.1 per cent and appears to vindicate the rate rise enacted by the Bank of England earlier this month.

Governor Mark Carney has avoided having to write to the Chancellor to explain the situation by the skin of his teeth, as that is triggered at above 3 per cent rather than on the nose.

Nevertheless had he and his colleagues backed off from a raise at the last meeting they would have had serious questions to answer today.

As Christmas shopping season kicks off prices are running at 3% higher overall than a year ago.

The key question is not whether Carney will have to get his best pen out, but when will the next rate rise come?

The 'letter to the Chancellor' is good theatre for the media but it doesn't really mean much to average people or effect their finances.

What does mean a lot is the detail behind the headline inflation figure in terms of how much consumers will feel the sting in their day to day lives. According to research firm Kantar Worldpanel British grocery inflation was 3.4 per cent in the 12 weeks to November 5, its highest since November 2013, and well ahead of the overall inflation figure.

The fact that the rate is highest in food and drink means that as we hit the Christmas season, this bout of inflation is particularly hard on the badly off, especially those living off modest cash savings.

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So where next for inflation?

The Bank expects Consumer Price Index inflation to peak at 3.2 per cent this autumn. The consensus among other experts is in line with this, with most saying inflation is at or very near its peak now, so the only way is down from here.

That is not to say a further rise can be ruled out, particularly if the pound takes another dip or the oil price rises significantly.

'Our baseline case is that CPI inflation has now topped out,' said Investec's Philip Shaw. 'Admittedly this could be a close run thing, bearing in mind the recent rebound in crude oil costs and the knock-on effect on petrol prices. But the broader point is that inflation is, at the very least, close to a peak. Furthermore we expect a visible decline through the course of 2018. In this respect we note that trends at the PPI level are encouraging.'

Head of asset allocation research at wealth firm Rathbones, Ed Smith, is another who does not see much further to go beyond 3 per cent.

'While the Governor of the Bank of England gets off on a technicality this time – 3.0008 per cent doesn't count as breaching 3 per cent! - we believe that peak inflation is close,' he said. 'Indeed, our analysis suggests domestically generated inflation may have peaked as early as the first quarter of this year.

'And if it weren't for British Gas pushing up their prices and the recent increase in the sterling price of oil, headline consumer price inflation could have peaked earlier than November too.'

What does this mean for interest rates?

The speed at which the headline figure comes back in towards the 2 per cent figure considered most healthy for an economy will be the key determinant of how soon we see the next rate rise.

Most economists see it as a long way off, with the consensus falling somewhere between the back end of 2018 and early 2019, but things can quickly change.

According to AJ Bell investment director Russ Mould, the weak pound and price of oil could 'force Mark Carney's hand' sooner than many think'.

'Bank of England Governor Mark Carney and his colleagues on the Monetary Policy Committee will not welcome this week's latest bout of weakness in sterling or renewed strength in the oil price, as both are complicating factors when it comes to inflation, which at 3 per cent is still running some away above the official 2 per cent target,' commented Mould.

Bank of England chief Mark Carney narrowly avoided having to write to the Chancellor to explain why inflation is above target.

'It does seem that a sustained drop in the value of the pound can lead to inflation, while strength can help dampen it down The Bank might be able to do something about this, by raising interest rates more quickly than the markets currently anticipate to make sterling a more attractive proposition relative to say the dollar, yen, or euro.

'A 12-month LIBOR rate of 0.77 per cent suggests that investors are currently factoring in just one more quarter-point borrowing cost hike by this time next year.'

'Whether the MPC wants to quickly tighten policy remains to be seen, given lingering doubts over the UK's economic momentum and the Bank of England's widely-voiced concerns about the possible impact of Brexit come 2019,' Mould added.

What should I do with my savings and investments?

A very broad question, with many possible answers. It can all be summed up well in one sentence though. You should put most of your money into investments rather than savings if you are in it for the long term.

While investing incurs risk that holding cash does not, this risk can be made very low if you invest in a wide range of funds and avoid any big bets on single stocks.

'To rub salt in the wounds, many banks are holding their cards close to their chest when it comes to revealing whether they will pass the rate hike onto savers, meaning little or no respite for those who hold their savings in cash,' noted Maike Currie, investment director for personal investing at Fidelity International.

'This means that as each month rolls by consumers, including those who have been prudent with their money, are getting progressively poorer as both our wages and the returns available on cash fail to keep abreast of rising prices.'

'Against this backdrop, the stock market remains the best hope for generating an inflation-beating return,' Currie continued.

'Our calculations show that if you had invested £15,000 into the FTSE All Share index over the past ten years you would now be left with £25,648. If, however, you had invested £15,000 into the average UK savings account over the same period, you would be left with a paltry £15,571. That's a difference of £10,077 – too big for any sensible saver to ignore.'